NCPA - National Center for Policy Analysis

Lumber Users Band Together To Defeat Trade Quotas

August 11, 2000

The U.S. timber industry has successfully lobbied for tariffs which keep Canadian softwood lumber off American markets. Their efforts have fueled one of America's oldest and most intractable trade disputes.

  • The Softwood Lumber Agreement between the U.S. and Canada in 1996 sets export quotas for Canada's largest lumber-producing provinces and then imposes punishing surcharges on above-quota shipments.
  • A recent Cato Institute study found that trade restrictions have jacked up the price of lumber 20 percent to 35 percent -- or $50 to $80 per thousand board feet.
  • As a result, the cost of an average new home is $800 to $1,300 higher than it would be if free trade prevailed.
  • The Bureau of the Census estimates that every $1,000 increase in housing prices means that an additional 300,000 families are unable to purchase a home.

But the agreement, which is due to expire on March 31, 2001, might be allowed to die. That's because U.S. lumber users -- including the National Association of Home Builders, the National Lumber and Building Material Dealers Association, Home Depot and affordable housing groups -- have banded together to demand that the agreement not be renewed and no new restrictions be erected in its place.

U.S. lumber interests might claim they are "protecting U.S. jobs." But that claim won't hold up, since there were only 217,000 American jobs in logging and sawmills in 1999. That compares to 510,000 jobs in lumber-using manufacturing industries, 744,000 jobs in the wholesale and retail lumber trade, and more than 4.7 million jobs in home building.

Source: Brink Lindsey (Cato Institute), "Against the Grain: How Lumber Quotas Hammer Home Buyers," Wall Street Journal, August 11, 2000.


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